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PRA reflects on 2015 Solvency 2 internal model approval process

PRA has published a letter on the 2015 Solvency 2 internal model approval process. The letter focuses on PRA’s use of a quantitative framework to assist with decision-making and sets out how PRA views the Solvency Capital Requirement (SCR) under Solvency 2, whether it results from the use of an internal model or the standard formula. PRA clarifies that it will not deploy a single ratio, somewhere above the SCR, as a formal intervention point across the insurance sector as to do so would contravene the legislators’ intent. (Source: PRA Reflects on 2015 Solvency 2 Internal Model Approval Process)